'So Pensions in Europe Will Remain Sustainable - But Will They Remain Adequate?' - An Assessment of the Consequences of the AWG Projections on the Adequacy of Social Security Pensions in Belgium, Italy and Germany

22 Pages Posted: 29 Jan 2012

See all articles by Hermann Buslei

Hermann Buslei

German Institute for Economic Research (DIW Berlin)

Gijs Dekkers

Centre for Sociological Research, Katholieke Universiteit Leuven and Federal Planning Bureau, Belgium

Maria Cozzolino

ISAE, Istituto di Studi e Analisi Economica

Raphael Desmet

Federal Planning Bureau, Belgium

Johannes Geyer

German Institute for Economic Research (DIW Berlin)

Dirk Hofmann

German Institute for Economic Research (DIW Berlin)

Michele Raitano

Sapienza University of Rome

Viktor Steiner

German Institute for Economic Research (DIW Berlin)

Paola Tanda

ISAE, Istituto di Studi e Analisi Economica

Simone Tedeschi

ISAE, Istituto di Studi e Analisi Economica

Frédéric Verschueren

Government of the Kingdom of Belgium - Federal Planning Bureau (FPB)

Date Written: March 26, 2009

Abstract

We stress that the demographic changes that Europe will face in the coming decades will have profound consequences not only for the sustainability but also for the adequacy of social security schemes, including pensions. Our paper aims at assessing the consequences of the Ageing Working Group projections on the adequacy of social security pensions. We use a microsimulation model and examine three countries: Belgium, Germany and Italy. Adequacy is assessed on the basis of the replacement rate, the redistributive impact of pensions and the different risks of poverty. Pension beneficiaries are compared to wage-earners. The replacement rate will follow different patterns: in Belgium and Germany it will decline until the beginning of the 2030s and recover later, in Italy it will show a continuous decrease. In all three countries income inequality declines from the working age to the retirement age and the risk of poverty among pensioners first increases and then decreases. The pension reforms implemented in the three countries have similar effects on income redistribution and poverty levels; these effects are particularly strong in Italy.

Keywords: adequacy, pensions, microsimulation

JEL Classification: J14, D31, I32

Suggested Citation

Buslei, Hermann and Dekkers, Gijs and Cozzolino, Maria and Desmet, Raphael and Geyer, Johannes and Hofmann, Dirk and Raitano, Michele and Steiner, Viktor and Tanda, Paola and Tedeschi, Simone and Verschueren, Frédéric, 'So Pensions in Europe Will Remain Sustainable - But Will They Remain Adequate?' - An Assessment of the Consequences of the AWG Projections on the Adequacy of Social Security Pensions in Belgium, Italy and Germany (March 26, 2009). Available at SSRN: https://ssrn.com/abstract=1992476 or http://dx.doi.org/10.2139/ssrn.1992476

Hermann Buslei

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Gijs Dekkers (Contact Author)

Centre for Sociological Research, Katholieke Universiteit Leuven and Federal Planning Bureau, Belgium ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

Maria Cozzolino

ISAE, Istituto di Studi e Analisi Economica ( email )

Piazza dell' Indipendenza 4
I-00185
Italy

Raphael Desmet

Federal Planning Bureau, Belgium ( email )

Johannes Geyer

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

HOME PAGE: http://www.diw.de/programme/jsp/MA.jsp?uid=jgeyer&language=en

Dirk Hofmann

German Institute for Economic Research (DIW Berlin) ( email )

Michele Raitano

Sapienza University of Rome ( email )

Via del Castro Laurenziano 9
Roma, Rome 00161
Italy

HOME PAGE: http://https://sites.google.com/a/uniroma1.it/micheleraitano-eng/

Viktor Steiner

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Paola Tanda

ISAE, Istituto di Studi e Analisi Economica

Piazza dell' Indipendenza 4
I-00185
Italy

Simone Tedeschi

ISAE, Istituto di Studi e Analisi Economica ( email )

Piazza dell' Indipendenza 4
I-00185
Italy

Frédéric Verschueren

Government of the Kingdom of Belgium - Federal Planning Bureau (FPB) ( email )

Brussels, 1000
Belgium

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